The US remains in a steady state along the coupon curve. But there’s a lot going on in the money markets pipes as repo tightness persists. As we head into the Federal Reserve meeting, the big call would be to maintain the MBS roll-off and replace it with buying of T-bills, while broadly ending quantitative tightening
Global bond yields are pushing lower amidst a broader flight to safety, with Gilts leading the way. Even now, Gilt yields still seem high, driven by a hawkish Bank of England and a material risk premium. Gilt swap spreads were more sensitive to French turmoil than to dynamics in US Treasuries or Bunds, but this should change with more budget certainty
US markets turned slightly bullish into quarter-end – and the government shutdown. As a result, key directional cues from official data around jobs and prices will be delayed. Eurozone preliminary inflation data is unlikely to provide markets with more clarity on the direction of travel
The Dutch central bank may start sending out more approvals for the transitioning of Dutch pension funds from a defined benefit to a defined contribution model this week. But with the 1 January transition date fast approaching, we may also start hearing about more delays. Meanwhile, a US government shutdown could weigh on economic sentiment
